Premier Cru fraud: Owner John Fox imprisoned for six years

Premier Cru wine shop owner John E Fox has been jailed for six-and-a-half years after he admitted running a wine ‘Ponzi scheme’ that robbed customers of at least US$45m.

John Fox jailed for 78 months over Premier Cru fraud
Hundreds of thousands of dollars spent on women and fast cars
Fresh hearing in January 2017 to decide how much Fox must pay back

Fox, who admitted a charge of wire fraud in August, spent the money on expensive cars, including Corvettes, Ferraris, Mercedes-Benzes and a Maserati, golf club memberships and other personal expenses – including lavishing more than US$900,000 on women he met online.

The 66-year-old co-founder of Premier Cru, a wine store in Berkeley, California, admitted orchestrating a massive scheme – described by US District Judge James Donato as ‘a long-running empire of deception’ – to defraud customers, beginning in the late 1990s.

Fox, of Concord, California, falsified purchase orders for wine he never bought, entering this ‘phantom wine’ into the retailer’s inventory and then selling it on to customers.

Between 2010 and 2015 alone, according to his plea agreement, Fox sold or caused Premier Cru’s salespeople to sell some US$20m-worth of wine that did not exist.

Where he did agree with foreign suppliers to pay for wine within 30 days, Fox did so knowing that the company would not be able to make the payments, because he had embezzled funds from Premier Cru’s business accounts.

He also diverted money coming in from new clients to pay for wine ordered by previous customers, but never received.

Fox used Premier Cru’s business accounts to fund his extravagant lifestyle, and transferred money into personal accounts in his own name and in fake names.

When Premier Cru filed for bankruptcy in January, it had reported debts of US$70m, of which US$45m was owed to customers for wine never received.

As well as a 78-month jail sentence, Fox was ordered to undergo three years of supervised release.

A further court hearing on 18 January will decide how much of the money Fox should repay.